KUALA LUMPUR: Prime Minister Tun Dr Mahathir Mohamad says his administration is expected to reduce the national debt, from RM1 trillion to RM800 billion through various approaches, including dissolving some agencies altogether.
In an interview with Voice of America, he said he inherited a government that was “poorly managed” and had accumulated a lot of debt via loans from other countries and foreign banks.
“The previous government has accumulated huge amount of borrowings from other countries, from foreign banks, and even from local sources, so the first thing that we need to do of course is to ensure that we are able to service the loans, at least, and to reduce the principle that has been borrowed,” he said.
The prime minister said the new government under Pakatan Harapan would not let the national debt remain at the existing level.
He said among the early steps taken by the government was to study the national debt with the aim of reducing it by RM200 billion, including by reducing government spending.
“We saw many political appointees in the government who were doing work for the political party, not the government. So we had to reduce the workforce.. the same applies to the existence of several agencies who are not managed by the government but yet, use government funds.
“The worst is 1Malaysia Development Bhd (1MDB)... the government is setting a ceiling for loans to ensure that these matters are at a manageable level.
“Problems arise when there are companies, wholly owned by the government yet not subject to government laws and regulations, which then lead them to borrow large amounts, which are then lost or stolen.
“These are among the elements which the government needs to eliminate,” he said.
Dr Mahathir said he is leading a government that inherited an administration and financial system that had been ‘ruined’ by former prime minister Datuk Seri Najib Razak, which he said has landed the nation in a serious debt crisis.
He said that under the previous government, the systems of old had been ignored and a new, authoritarian system put in place.
"My first 22 years as prime minister was fairly easy. I inherited a system that was already there.
"All I had to do was to introduce new ideas so that we could expedite the growth and development of Malaysia.
"But here, I am dealing with a country that has been actually destroyed. Its finances have been destroyed.
"The system of government has been ignored and not used and a new system, or rather an authoritarian system, has been introduced," he said.
Finance Minister Lim Guan Eng had defined the national debt as including government guarantees for the repayment of agencies debts and lease payments, which are now worth RM1,087.3 billion in total, or 80.3 per cent of the Gross Domestic Product.
Dr Mahathir also said that the actions of the previous two prime ministers in changing the country’s direction was what led to the country failing to reach the objectives of Vision 2020.
However, he expressed confidence that Malaysia can achieve developed nation status in a few years.
“We can become a developed country in a shorter period compared to other developing nations, by focusing on education and technology,” he said.
The prime minister was also asked on Malaysia’s stand on tackling the Islamic State threat. He said Malaysian authorities were capable of controlling the matter to prevent it from triggering unwanted incidences.
“We are concerned with the presence of Malaysians in IS, as well as Malaysians having gone to Syria and getting involved in IS.
“But the situation is under control, and has not led to any unfortunate incidences in Malaysia,” he said.